LightwaveRF Plc (AIM:LWRF) Half-year Report
LightwaveRF plc (“LightwaveRF” or the “Company”), leading smart home solutions provider for the remote control and monitoring of light, heat, power and security through a wide range of devices via just one app, is pleased to announce its results for the six months ended 31 March 2017.
§ Revenue for the period of £1,174,000 (2016: £804,000)
§ Gross margin of 39.4% (2016: 37.1%)
§ Loss before taxation of £333,000 (2016: loss £384,000)
§ Current order book of £1,100,000 after invoicing over £500,000 in April
§ Total Lightwave Link installations 44,000 to date
§ Voice control now over 5,500 users, mostly through Amazon Alexa
Commenting, Barry Gamble, Chairman said:
“We have seen a significant improvement in sales via multiple distributors and continue to develop our technology most recently as a partner of Google. Later this year, we are launching a new range of devices, which we expect also to be Apple Homekit certified, the culmination of an extended period of development work. Under the leadership of our new CEO, we look forward to building further brand awareness and exploiting the wider market opportunity.”
LightwaveRF plc (“LightwaveRF” or the “Company”) pioneered smart home automation with the introduction of the market’s first Internet enabled devices in 2008. Today, the Company offers a market leading proprietary Internet of Things (“IoT”) platform together with applications and connected devices, which provide fully integrated remote control and monitoring of light, heat, power and security. We are dedicated to making everyone’s lives easier and more fulfilled through world leading smart home technology.
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Interim results for the six months ended 31 March 2017
Much progress has been made in the last few months. Our UK distribution has been developed significantly leading to higher sales volumes and more regular orders. We have also strengthened our customer support offering and increased sales direct to consumers. Revenue for this half year of £1.17 million is already over 80% of the last full year’s total of £1.44 million.
Having already successfully integrated our cloud platform with Google Nest, we have now done so with Amazon Alexa and have achieved best in class reviews; a testament to our technology and product capability. Just this week, we announced that LightwaveRF was amongst the launch group of smart home partners for Google Home. Google Assistant voice control for the new Google Home hands-free smart speaker was launched to our user base and featured at Google I/O, the annual worldwide developer festival being held this week. We see voice control of smart home solutions as being very important for our business, both now and in the future.
In December, we strengthened our balance sheet by completing a fundraising of £2.2 million to enable us to continue investing in technology and marketing.
We have restructured the board and appointed Andrew Pearson as our new Chief Executive. He brings with him significant experience in growing technology and Internet related businesses and skills that will strengthen the Company’s ability to deliver its strategic goals. He has already made a significant impact on the business, spending much of the first few weeks consulting with colleagues, customers and distribution partners. I believe this has deepened the understanding of our potential and will further accelerate the growth of the business.
In the relatively tight time windows allowed by market regulations, we took the opportunity to make awards of share options to incentivise key members of the executive team. I was also pleased to be able to increase my shareholding both in the December fund raising and in March, immediately after the appointment of the new CEO.
We have seen a significant improvement in sales via multiple distributors and continue to develop our technology most recently as a partner of Google. Later this year, we are launching a new range of devices, which we expect also to be Apple Homekit certified, the culmination of an extended period of development work. Under the leadership of our new CEO, we look forward to building further brand awareness and exploiting the wider market opportunity.
19 May 2017
Chief Executive’s Review
I am delighted to have been asked to lead LightwaveRF through the next phase of our journey. The Internet of Things is transforming the way we all live and work and as such is an arena that brings significant opportunity. I am looking forward to growing the Company in the years ahead through helping people live smarter.
Revenue for the six months ended 31 March 2017 was £1,174,000 (2016: £804,000). The current order book is £1.1 million, following invoicing of over £500,000 in April.
Gross profit was £462,000 (2016: £298,000) with stronger margins of 39.4% (2016: 37.1 %), which reflected an improved sales mix and an increase in direct consumer sales. We have continued our ongoing device development work and the capital investment in our apps and cloud platform to enable us to achieve further product integrations.
For the half year, administration expenses were £913,000 (2016: £771,000), including amortisation of £151,000 (2016: £35,000). Capitalised development expenditure under IAS 38 was £228,000 (2016: £258,000) reflecting savings and better control as more product development work came in house and reliance on external contractors was reduced. After recognising research and development tax credits as other income of £124,000 (2016: £98,000) the loss for the period is reduced to £333,000 (2016: £384,000). The basic loss per share is 1.30 pence (2016: loss 2.03 pence).
Cash absorbed by operations for the period was £942,000 (2016: £509,000); more than two thirds of this was due to working capital movements. We held higher inventories to mitigate the effect of manufacturing lead times. Increased revenues lifted trade and other receivables to £592,000 (2016: £239,000) all of which are within commercial terms. Total loans and borrowings were £770,000 (2016: £855,000). Cash at 31 March 2017 was at £816,000 (2016 £119,000). We currently have an undrawn working capital facility of £1.1 million.
LightwaveRF has the potential to be the leader in the international smart home market. As an early pioneer, the Company has the assets upon which we can seek to build market leadership – a known smart home brand, an excellent and wide-ranging set of products (devices, app software and our cloud platform), able and experienced people, deep understanding and experience of the market, and a loyal and growing customer base.
A large proportion of our 44,000 LightwaveRF global installations have been UK based households. Over 5,500 of our customers are using voice controlled smart home automation, mostly Amazon Alexa. As well as winning new customers, our existing customers are increasingly buying more LightwaveRF devices. This is real evidence of the success of our fully integrated approach to smart home automation and our comprehensive product range. With over 15 million households in the UK alone, we have a large available market on our doorstep. We are in the early stages of the smart home revolution and there is a large market opportunity for us to exploit. We expect Amazon Alexa (and the expanding Amazon Echo device range), Google Assistant (and the Google Home hands-free smart speaker) and Apple’s Siri (through use on multiple Apple devices) to be sustainable drivers of revenue growth for the Company.
Historically, our technology focus and our limited distribution capability have hindered us. We believe there is an open market opportunity for a UK Company that offers a wide and deep range of integrated smart home solutions to achieve significant scale. In our view, competitors that have gadgets, offer single device or single market segment solutions or are associated with existing major utilities companies are not as well positioned to execute on this opportunity.
Our approach to recruiting will be vital to future growth. We intend to significantly strengthen our management team with additional experienced and able executives in marketing, sales and technology management. This will support and enhance the talented team which has achieved considerable progress to date.
In the period ahead, we intend to take the following key steps:
· Solidify and extend our brand and our UK household consumer base, and in support of this make a step change in marketing investment.
· Launch a new range of devices later this year, which we also expect will be Apple Homekit certified, as part of a full product road map in place for delivery through 2018.
· Launch an enhanced and redesigned app and enable further integrations at both app and cloud levels, to allow our customers better coordination and control of their smart home solutions.
· Expand voice control capability, building on our recent positive momentum with Amazon Alexa and now Google Assistant for the new Google Home hands-free smart speaker.
· Continue to broaden and deepen our channels to market, including an expansion of our direct sales capability, which will see our products available via our own web site.
· Expand our data management efforts and build on the work we have already undertaken to offer our customers dashboards that show their energy usage and other smart home data.
· Add SMEs and other light industry commercial customers where we see good product fit, using a small but growing range of delivery partners.
We offer market leading smart home solutions and have deep domain expertise. We have done a lot of work to more fully understand customer needs and how to align our product and services offerings to them. There remains much work to do and additional investment to make as we align our organisation, product set and customer value proposition. We are confident that we have the right strategy in place to scale our Company. Looking further forward, we will begin to prepare for international expansion, and we may make acquisitions that are additive in terms of customers, revenue and technology.
Chief Executive Officer
19 May 2017
For full half year financials please read the RNS in it’s entirety here.
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